New research has revealed almost 45% of young people are more likely to want to purchase a home now.
A survey from Mortgage Choice found the pandemic has caused young people to shift focus to their financial goals, with many feeling more optimistic about home ownership.
The survey found saving money was now the highest priority for young people, with over 60% reducing their spending to buy a home sooner.
Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.
Smart Booster Home Loan
- Discount variable for 1 year <=80% LVR
- No ongoing fees
- Unlimited redraw facility
Monthly repayments: $1,476
- Discount variable for 1 year
- No ongoing fees
- Unlimited redraw facility
Base criteria of: a $400,000 loan amount, variable, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.
Susan Mitchell, Chief Executive Officer at Mortgage Choice, said COVID had given everyone a wake up call, which for young people meant evaluating their financial goals.
“Despite the challenges of getting into the property market, young people are not giving up on the great Australian dream," Ms Mitchell said.
"In times of uncertainty, it is human nature to want stability, and this is what investing in property can provide.
“The fact that first home buyers can now access the most competitive home loan rates on record and unprecedented levels of government support such as grants and schemes provides compelling incentives to act on property ownership dreams.”
The survey found 85% of respondents had changed their saving and spending behaviour since the pandemic, with 70% planning to maintain these habits.
Although keen on buying property, many young Australians found the process to be complicated.
Almost a third of first home buyers had minimal confidence in understanding and choosing home loan features, while 10% were not confident at all.
'Rainy day' fund takes highest priority
Over half of Australians said COVID had forced them to change their 2021 financial goals compared to previous years, a survey from ME Bank revealed.
Building up a 'rainy day' savings was the most listed financial goal and listed as the number one in terms of importance.
Other popular goals included saving for a holiday, car, or other expense, saving enough to buy a property to live in, cutting back on expenses, and building wealth for retirement.
According to the study, 66% of Australians said the pandemic had enlightened them as to the importance of having a 'rainy day' fund.
ME’s General Manager Personal Banking Claudio Mazzarella said the survey was encouraging, given a recent ME Bank survey's findings that 21% of households had less than $1,000 in savings.
“In uncertain times it pays to focus on what you can control. Growing a stash of emergency money can be good for your bank balance – and your peace of mind," Ms Mazzarella said.
The biggest barriers in the way of Australians reaching their 2021 financial goals were reported to be ‘inadequate incomes’ (41%) ‘expenses’ (37%), and the ‘impact of COVID-19’ (28%).
Overall, the minority of respondents (29%) said they were ‘very likely’ to achieve their goals in 2021, indicating a general lack of confidence in attaining them.
The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.
In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.
*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may inﬂuence the cost of the loan.
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